Bipartisan House bill would benefit gig economy workers

A bipartisan group of lawmakers in the House of Representatives, led by Rep. Henry Cuellar (D-TX-28), recently introduced a bill called the Worker Flexibility and Choice Act. Their new proposal would establish much-needed protections for gig economy workers while also creating a new category of labor law for independent contractors. Speaking shortly after introducing the bill, Rep. Cueller stated that “the bipartisan Worker Flexibility and Choice Act will empower workers to choose the type of work that best fits their needs, while allowing businesses to offer workplace benefits traditionally only available to employees.”

The Worker Flexibility and Choice Act would change the Fair Labor Standards Act (FLSA) and allow gig economy workers that have entered into a worker flexibility agreement to be categorized as independent contractors rather than employees. In practice, this means that workers would receive new protections related to things like privacy, nondiscrimination and safety. However, they would not receive certain minimum wage and overtime protections specific to traditional employees. 

The primary difference between traditional employees and contractors is that an employee is entitled to an hourly wage or salary, tax withholdings, paid time off, and benefits. As their name suggests, independent contractors work independently and benefit from greater flexibility and control over their work. However, in exchange for this flexibility, contractors are not covered by minimum wage laws or other benefits.

Despite these tradeoffs, contracting arrangements are only growing in popularity. A 2021 study by Upwork found that 59 million Americans performed freelance work over the past 12 months, equal to 36 percent of the population. The same study estimates that freelancers contribute $1.3 trillion to the U.S. economy in annual earnings.

The rapid growth of independent contracting as an employment option has given rise to a national debate over worker classification, with some parties arguing companies are intentionally misclassifying workers as independent contractors. Recently, the Department of Labor has taken a more proactive role in regulating the use of independent contractors, announcing its intent to issue a rule to make it harder for gig economy to operate as they do now. 

Passing the Worker Freedom and Choice Act would enable millions of gig workers to continue earning money in an employment model they overwhelmingly support. A 2020 Morning Consult survey found that 71 percent of independent contractors reported that “the freedom of being an independent contractor outweighs the benefits of being an employee.” In addition, 90 percent of survey respondents said that this employment arrangement was good for their lifestyle.

Approving the bill would also benefit consumers. In 2016, a poll by the Pew Research Center found that 68 percent of rideshare users found these companies “less expensive than taking a taxi.” Additionally, 60 percent said that ridesharing companies are “more reliable” than a taxi or alternative forms of transportation. In poll after poll, consumers voice satisfaction with the services they receive from companies that utilize independent contractors. These companies are adamant that their unique business model makes many of these services possible. 

Not everyone supports establishing new protections for independent contractors. Labor unions have generally opposed independent contracting because these workers lack a path to unionize and allegedly can depress wages of union workers. 

However, voters have routinely demonstrated support for independent contracting at the ballot box. The majority understand that creating a new employment category to protect that business model would go a long way toward preserving the benefits they receive from gig economy and delivery companies. Americans are inclined to agree – a 2021 study by Pew found that 62 percent of Americans believed that gig economy workers should be classified as independent contractors. 

While worker classification laws have traditionally been passed at the state and local level, there is no reason why a similar law could not be passed federally. The Worker Flexibility and Choice Act provides that opportunity. Such a law would establish important rules of conduct for states to follow when regulating the gig economy and greatly reduce the uncertainty that surrounds the work structure. The law would also serve as a useful compromise that offers workers new protections, while also preserving the best attributes of the gig economy business model. 

Congress must move quickly and pass the Worker Flexibility and Choice Act to unleash the full potential of the gig economy.

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